Branson/Virgin to rescue Northern Rock [Merged]

Someone said to call it "Virgin Rocks" but he said "Virgin Money" is better...
Well virgin rocks would just be bragging.

surfsister wrote: »

It says today in the paper that Richard Branson has been in talks to merge his credit card, investment products and life insurance/pensions into the banks business.
Virgin quote, 'the consortium believes Northern rock must seek a complete rebranding to repair confidence.'
So watch this space!

Posted this on the NR thread on the 12th Oct

http://forums.moneysavingexpert.com/showthread.html?t=553760&page=23

:cool:

A Telegraph Whitehall source suggests that Branson and the other two suitors think the value of the business is between "..nothing & something and [is] probably nearer nothing." Not good news for shareholders.

I couldn't infer anything else from

this is bit i like :rolleyes:

It's pretty obvious that anyone buying into NR and putting a lot of resource into a rescue is going to get a disproportionately large share of the equity.

But I think the Telegraph quote is rather over-stating matters - as long as the existing shareholders retain SOME share of the equity, they are better off than they were likely to be a few weeks ago when the only offer on the table was the ludicrous "break it up and sell the mortgages at a discount" type of idea. Those proposals had no logic - NR's mortgage assets are NOT impaired and are worth more than their face value, and that's what any buyer would normally have to pay for them. The only reason they would possibly be worth less than face value is if the buyer cannot fund them at a reasonable cost and I don't believe that the funding situation is one which will continue for very long.

Bearing in mind that NR's share price is about 1/5th of its value at the peak, if the shareholders end up with (say) 20% of the equity they still won't be any worse off than they are now if things recover. And if they get more than 20% of the equity, they could be reckoned to be better off than without the Branson bid (and selling up at today's market price).

This is all IMHO and DYOR etc. I'm certainly not recommending that anyone buys, or sells, NR shares.

They are an enormous gamble and are still flip of a coin. They could recover......or they could lose 100% of their value.

I've gambled £3,000 that I can afford to lose and so far it has been a huge rollercoaster in only 3 weeks!

Richard Branson is heading a consortium that is looking to inject lots of money and to have the bank re-branded. It is only at the initial stages and there are also other interested parties which could do lots to improve or wipe out the current price.